Uplifting the MSMEs

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By Romsanne R. Ortiguero

The Philippines is considered as one of the fastest-growing economies in Asia, and one of the critical drivers of this growth is attributed to the micro, small, and medium enterprises (MSMEs). According to the Department of Trade and Industry (DTI), the sector comprises 99.6% of all registered business in the Philippines, and employs more than 60% of the country’s work force.

Along with the projected sustained economic progress of the country are more opportunities of growth for MSMEs as evident in the increase in the number of Filipinos delving into entrepreneurship in the past few years.

Isla Lipana & Co., the Philippine member firm of PricewaterhouseCoopers (PwC), noted in its 2017 Philippine Startup Survey — conducted among 106 start-up founders — that the “spirit of entrepreneurship has started to spread” as seen in over 900,000 MSMEs in the country.

“The Philippine start-up ecosystem grew as more start-ups were launched in the recent years. Our findings show that 54% of our founders say that they launched their start-ups between 2016 and 2017,” the survey stated.

“It is also interesting to note that 87% of our founders had worked outside their start-ups, showing that employees are transitioning to becoming entrepreneurs. This is also indicative of the high level of confidence in the country’s economy, government, and general business environment,” it also said, and added that the respondents expressed optimism that the business climate will even be better.

This optimism is shared by the government, with the current administration voicing its support for MSMEs and promising to give higher funding for DTI to support the department’s programs geared to further spur the growth of this sector.

For those thinking of kickstarting their own enterprise but does not know where to start, DTI has programs to help strengthen start-ups. One is the Go Negosyo Center. Under the Go Negosyo Law or Republic Act. No. 10644, the program mandates the creation of a Negosyo Center in all provinces, cities, and municipalities to promote ease of doing business and ensure access to services for MSMEs. Now with more than 700 centers in different parts of the country, aspiring entrepreneurs can have access to a number of services.

First is money, where the center can connect you with the right financing partner or help in facilitating access to grants and other forms of financial assistance, and access to shared service facilities and equipment, which is a system that provides machineries and equipments to entrepreneurs.

Another is market linkage; and lastly, mentorship, where the center will provide information and services in training, financing, and marketing. The mentorship also features the Kapatid Mentor Me Project that provides modules on various business concepts such as product development, marketing, taxation, operations management, and finance, among many others.

DTI also has the Go Lokal program, which provides free marketing platform and opportunity for MSMEs to go mainstream without incurring the high costs of operating a retail outlet. The program features Go Lokal! stores in high retail outlets such as malls, offering MSME products made from quality indigenous materials, have unique design, and are suitable for the global export market. Also, through this program, MSMEs can collaborate with product specialists from the Design Center of the Philippines to further develop the quality, packaging, and other aspects of their products.

In collaboration with the Department of Science and Technology (DoST), IdeaSpace Foundation, and JP Morgan, DTI launched QBO Innovation Hub to encourage collaboration and empower the start-up community by providing consultation services, networking events, and workshops, among others.

The government has positive programs for MSMEs that small entrepreneurs laud. Arvin Joseph Peralta, chocolate maker and founder of social enterprise Hiraya Artisan Chocolates, shared to BusinessWorld in an e-mail, “There are actually a lot of government programs that help MSMEs, especially programs from DoST and DTI.”

“Currently, we are part of the Go Lokal! store, which is a project by DTI to bring MSME products to the mainstream market. We also plan to apply in the DoST-SETUP (Small & Medium Enterprise Technology Upgrading Program) once we turn three years and become eligible to apply. It is a government loan/financing program for upgrading technology and machinery used in production,” he continued.

Mr. Peralta also pointed out that if there is one thing government could always improve on, it would be faster processes and transactions.

Understanding this predicament, and to further enliven the start-up ecosystem, Senate Bill No. 1532 or the Innovative Start-up Act was filed by Senator Paolo Benigno “Bam” Aquino IV, who is also the principal author of the Go Negosyo Act. The bill aims to provide incentives and remove constraints in building new and innovative businesses.

The provisions of the bill include tax exemptions; access to the P10-billion venture fund; programs that support the research and development initiatives of the start-up; access to locally and internationally offered programs; providing support in international competitions; and linkage to potential investors, mentors, and collaborators.

Mr. Aquino said in a talk about enabling start-ups in the Philippines during the recently concluded Spark Fest, an annual conference for start-ups, “We’re looking at this bill as a catch all for all of the start ups to be able to get that little support they need just to be able to hurdle that first part.”

He refers to the first three to five years of doing business, which for most entrepreneurs, were the most difficult.

“What we did also for the Start-up Act is we expanded the definition of ‘start-up,’ and the term we used is ‘Innovative Start-up’ so it does not only refer to tech companies, but to any company that provides an innovative way of production, supply chain management, etc.,” Mr. Aquino said, adding that even our social entrepreneurs and creative entrepreneurs who are doing something different can benefit from the proposed bill.

The senator is also asking the start-up community to support the bill, which is now undergoing a period of amendments.

“We hope that your sector, which is directly related to our Innovative Start-up Act, would show its support for this bill because as you know, when the sector itself is loud and really organized to support [its] initiatives, it usually passes faster. We need your help in supporting this initiative — to make sure they are passed, to make sure that the right version comes out as legislation, and along the way to make sure that these initiatives are here to really give you the space you need to survive, thrive, and succeed,” Mr. Aquino said.